Speaking after a conference call with Greek leader George Papandreou, German chancellor Angela Merkel and French president Nicolas Sarkozy moved on Wednesday night to calm fears Greece could be forced out of the eurozone.

In comments shortly after the call, the North European leaders said they were convinced Greece's future was as a member of the single currency.

"Putting in place commitments of the [bail-out] programme is essential for the Greek economy to return to a path of lasting and balanced growth," they said.

In response, Greece confirmed it was determined to meet all obligations agreed with international leaders in exchange for the European Union/International Monetary Fund bail-out. Earlier in the day, Olli Rehn, EU commissioner for economic and monetary affairs, said a Greek default or exit from the eurozone would "carry dramatic economic and social and political costs".

News of the talks came hours after European Commission president Jose Manuel Barroso vowed to bring proposals for the introduction of "eurobonds" as part of a concerted effort he described as a "fight for the economic and political future of Europe".

He insisted creating the first bond issued backed by all 17 eurozone members "could be implemented within the terms of the current treaty".

In a passionate speech to the European Parliament, Mr Barroso admitted even the bond - an idea staunchly resisted by Germany - would "not bring an immediate solution" to the debt crisis but would "come as an element of a comprehensive approach to further economic and political integration".

He added: "This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world."

European markets rebounded as traders felt politicians were ready to take radical steps to end the crisis. But it was a choppy day that included downgrades of two of France's biggest banks; warnings of an imminent Greek default; and comments from Chinese premier Wen Jiabao on Beijing's support of the eurozone.

In Germany the DAX soared 3.4pc; France's CAC was up 1.9pc, while the Stoxx Europe 600 rose 1.5pc. In London the FTSE 100 gained 1pc.

At one point, markets dipped dramatically on rumours the Austrian parliament had failed to ratify the expansion of the European Financial Stability Facility bail-out fund, but recovered when it emerged the decision had just been delayed.

Confidence was also lifted by Italian prime minister Silvio Berlusconi winning a confidence vote on a €54bn (£47bn) austerity plan aimed at stemming a debt crisis threatening the eurozone's third largest economy.

Moody's Investor Services downgraded Credit Agricole and Societe Generale and put BNP Paribas on negative watch on concerns of their exposure to Greek debt. Shares in the banks plunged - SocGen fell 10pc at one point.

However, Christian Noyer, Governor of the Bank of France defended the banks, pointing to the €200bn of spare collateral at the central bank. He added: "The recent stress test exercise clearly showed that they have the capacity to withstand a severe crisis."